"Gallowgate is well named. We'll be hanging off it tomorrow morning if we don't qualify."

In the minutes leading up to Wednesday night's demoralising elimination from the Champions League, the Newcastle United chairman Freddy Shepherd gave an interview to Radio Newcastle in which he said the above.

A couple of hours and four missed Newcastle penalties later, Shepherd bore the face of a condemned man. By three o'clock yesterday afternoon it must have mutated further, twitching furiously as Partizan Belgrade came out in a group with Real Madrid. Everything Newcastle wanted from the Champions League - drama, cash, credibility and profile - could be summed up in those two words: Real Madrid. As the hours passed, the sense of disappointment increased.

Instead of yesterday's Champions League extravaganza, today Newcastle will go into a draw for the Uefa Cup. Amazingly there were some on Tyneside prepared to argue that it is a competition Newcastle could win, seeming to forget that they have not won a trophy since the Uefa Cup's forerunner, the Fairs Cup, in 1969. This is no time to be making assumptions.

Even in finishing third in the Premiership last season Newcastle lost 11 of their 38 fixtures. They went out of the FA Cup in the third round and the League Cup at the first stage. Surprise surprise, the latter, against Everton, involved a penalty shoot-out.

Yet those cup exits were off set by Newcastle's continued participation in the Champions League and a challenge for the Premiership. Newcastle have no comparable cushion now and Birmingham City visit St James' Park tomorrow.

They will be spiky, and interesting, guests. It was against Birmingham on May 3 that Newcastle confirmed their third place in the Premiership with a 1-0 win. That meant a lap of honour and another Champions League qualifier. It also meant details such as Partizan Belgrade being taken for granted.

After the Birmingham match Shepherd said: "The future is so bright. We have a young team which is gaining experience at the highest level. I'm excited; there's probably not a more excited chairman in football right now. Mind you, I'm almost the most relieved chairman because Champions League football was essential for us this season. To qualify once is fine but to be seen as a truly big club you need to do it year in, year out."

By Shepherd's own definition Newcastle are not truly a big club this morning. What they are and where they go from here are legitimate questions.

One measurement arrived by yesterday lunchtime, the club's share price slumping 14%, wiping more than £7m off Newcastle's value. Shepherd also revealed another financial aspect on Wednesday, saying that last season's involvement in the Champions League was worth "some £11m - plus gate receipts". Earlier he had said of the second leg: "It's life or death - we need to win this."

So while some remained defiantly optimistic, though not many, the man who controls the club's budget and shapes its destiny considered Ivica Iliev's aggregate equaliser and Milivoje Cirkovic's decisive penalty to be mortal blows.

"Suddenly it's a pressure season," said Vinay Bedi, financial analyst with Wise Speke in Newcastle. "Newcastle want to be an established Champions League club, not a yo-yo member. So it's a gut-ache for them and it has implications."

Last January Newcastle stood, albeit briefly, at the top of the Premiership. They were able to purchase Jonathan Woodgate for £8m from Leeds United. Laurent Robert scored a winner against Liverpool.

On Wednesday Woodgate played reasonably but the historical deficiencies of the defence were prominent. Aaron Hughes's misfortune at missing the seventh Newcastle penalty meant a focus on the quiet full-back and Robson's comment that "Tottenham would love to be in the Uefa Cup" was an indication that Stephen Carr may well have been on his mind again.

Robson is obviously aware of Newcastle's defence - he would not have spent so long chasing Brett Emerton otherwise. But Newcastle contrived to miss out on the versatile £2.25m Australian and chose to spend £10m on paying Lee Bowyer for five years.

No one else has been acquired and it is now apparent that Robert must be discharged. The narcissistic Frenchman considers himself a dead-ball specialist. He took off his boots during the penalty shoot-out. Hugo Viana is another gifted left-footed expensive foreigner of questionable suitability for English football. Together they cost £18.5m.

Robson's total outlay is £60m-plus in nearly four years of steady progress and even in the post-match gloom he insisted: "It's not the end of the club, it's not the end of the team, it's not the end of the players."

Nor is it the end of Robson. But if Birmingham were to win tomorrow, Shepherd would doubtless stare at the manager in the visitors' dug-out. Steve Bruce is a Geordie. He understands the meaning of Gallowgate.